nobel prize winner paul krugman explains. krugman explains. >>> and now to the plunging gas prices.w $2 a gallon. in some states, still falling. shock waves around the world. analyze what it means for the economy and security after this background from rebecca jarvis. >> reporter: it is the gift that keeps on giving to american consumers. gas prices now down for 73-straight days and still heading lower. oklahoma and texas, the first in the country to see prices dip below $2 a gallon this week. and six other states poised to see prices below $2 before new year's. all of it the result of 40% plunge in oil prices. >> falling oil prices around the world have helped set a new low for drivers. >> one reason for the drop, the u.s. is drilling and fracking. supplying record amounts of oil and gas. this year surpassing saudi arabia as the world's top energy producer. the biggest question now, who are the winners from the price plunge? americans now saving $250 million a day on less expensive gas. about $1100 a year for the typical family. savings that could go towards everything from food to

some recent columns about this, including paul krugman hoss column in "-- paul krugman's column in "the new york times." he writes, "what is the purpose of winning elections? the answer i hope is to do good, not just set up your election -- your next election." it would have been incredibly cynical not to have seized that opportunity, and democrats should celebrate the fact they did the right thing. paul krugman's column from december 4. we want to get to our viewer calls. national city, michigan, yvonne, good morning. caller: i think it is terrible that they keep cutting medicare $65,000 -- iave mean, a $5,500 deductible. $320 for drugs. just to give an expansion of medicaid for people that are not even working. i live in a small town, and people up here are not working. ,hey get food stamps, medicaid and they go and they get the drugs from the pharmacy for nothing, and they sell them for $300. host: we are talking in this segment about the politics of the passage for the affordable care act and whether democrats have suffered. the lead editorial in "the wall street journal," "obamacar

let's bring this forward to the arts debate between paul krugman and john cochran -- they totally disagreen one of the great themes this year is where is the info structure spending? structure spending a keynesian program or just common sense? >> i think it is common sense. the founding fathers did give the government the right to build coastal roads. -- postal roads. i am just playing devil's advocate here. of the big problems i think in economics, and this is financial, not academic, if you can, cigarette, it is like supreme court cases. i can to you was someone is going to say about a certain subject before it even comes out of her mouth. >> absolutely. feels like freshwater economists and saltwater economists figuring out who gets the credit for the u.s. and u.k. ofpaul krugman, who is one the most respected -- and i read him all the time -- he wrote a blog post called jean-claude yellen recently saying that the fed is going to make a policy mistake by raising rates next year, but he also believes that my third policy has almost no effect at the zero lower bound. the new fed, the new p

. >> all politicians including krugman -- paul krugman says we need stimulus to make that demand go.y substance there to a need for global or united states? >> we are getting stimulus from very accommodative monetary policy. my friend paul krugman would say we need another big round of fiscal stimulus, and i do not see that happening . for better or worse, monetary policy is the only game in town right now. >> general rule of morning television, if you refer to someone as "my friend," you are about to disagree with them. >> true also in politics. . >> true on both counts. >> people talk like things are going to be normal again, what you are saying with the new neutral is that is not going to happen. >> what we are saying is that a taylor rule may work but with a lower neutral interest rate, if you will, if lower average policy. before the crisis, the fed got the funds rate to 5.25. it may not even get to 4%, so it is going to be much lower. >> the real rate is zero. >> the real rate is negative. we think it will get between zero and 1% real. >> as we for an interest rates, doesto --

i want to get to a quote from paul krugman, talking about, when push comes to shove, it is a pretty weak economy. we don't see any inflation. ratessk is, if we raise and it turns out we are mistaken, then the risk is huge. as we go into this year, as we look at this week, we could see a shift of emphasis away from the labor market to the fact that inflation is quite low. >> we will probably see a combination. you will see in the u.s. the start of a normalization come summertime. they will make a very compelling very gradually increase rates. the main message from the fed is going to be, yes, unemployment still we are%, but facing many pressures from inflation. important, your long-term trend of growth is above where you are at at the moment. the total about of debt in the system is sufficiently high. you, asnal question to we go into next year and so many of these calls short euro-dollar, short treasuries, are predicated on the federal reserve next year, is there a big risk that may not come about at all? >> yes. these kind of binary bets always have a big risk. everybody is on one side

there is a huge part of america that is not parsing john cochran or paul krugman or you.esperate for wage growth. when you look at a classic i slm classic monetary theory, econ 101, which you teach wonderfully, how do explain the real economic effects that we have now? how do the fold into where is the wage growth? >> how do i think about the lack of wage growth? >> yeah. >> we have not had a sustainable recovery yet. that is why we need to pursue further stimulus. >> can the fed generate economic growth? >> i think certainly with the right monetary policies they can. to talkry premature now about hiking in 2015. >> it is our twitter question of the day. are you more confident today than you were five years ago? thank you so much. tweet us. >> good morning, everyone of them ruble much stronger. if you are in russia, what do you do with it? in the last hour, oil has given it up. on west texasw intermediate. it's "bloomberg surveillance." >> oil sterling to hold its gains at this hour. earlier this morning, prices were moving higher for the second straight day. saudi arabia

. >> the standard paul krugman how much pain to cause in the meantime? lot of unnecessary pain by weakening the recovery. distant wishing between the economies that it will work for and the kind it won't. board, i think very recklessly. quickly, california. california was in terrible shape and it's doing better. all in all, it's gotten itself out of the mess. "maryu tell i watched poppins" this weekend. >> thank god for social media. does it feel like you live in an austerity freezone? >> it's lala land. >> at least you know it. like every word is feted. >> a little bit. i'm looking forward to it. he speaks tough. i am looking forward to it. >> olivia sterns is going to get them off script area --. >> i'm so happy we are not talking about petsmart. >> that is my quote of the day. come, we will talk about linkedin with guy kawasaki next. is this the undervalued social media network? applel ask the chief evangelist after the break. what is your book of the year? tweet us. ♪ make the best entertainment part of your holidays. catch all the hottest handpicked

i got to speak to paul krugman last night, a very thoughtful man. we were talking about how it's amazing that germany ondidn't learn the lesson of deflation. what you have to recognize is right now, germany is just a huge winner. everyone else is losing. that is untenable. >> ten-year yields 5.99%. that's what you get. >> the euro has been a huge win for germany. i think until europe decides they are going to break, the germans are not in control, which they totally are, we are going to be stuck with a market that is kind of, you and i will come in every day and discuss part of europe that is bad or basf is in trouble. >> 4.5% over two days. >> that's some of the story. i don't want to lose sight. what happened yesterday was the first time that the market seemed to understand maybe oil going down is good. maybe things are more stable than we thought. brian sullivan with a piece this morning from the permion is hurting. we are very concentrated in energy in this country. very concentrated areas. the amazing transformation of natural gas going to the

know many people who can stay in a mood, whether good or bad, for five years, except for maybe paul krugman i don't know if it counts. he's been in a bad mood his entire life. the debate continues between me and this fellow who is a friend of mine. it's possible we have this debate in 20 years when my teeth are falling out and drinking a beer in a rocking chair, we may not be talking about the tea party as we understand it today, but i think we will continue to understand -- talk about its influence. it is less a new independent forment than it has been the past five years a reinvigoration, another manifestation of the conservative movement. that we've seen strengths and response to overreach periodically. lecturere of this series, this panel, suggests the main inflection points -- goldwater, the reagan revolution, the republican revolution in the mid-1990's, and the tea party for the past five years. it's are marketable but it remains as influential it does today given the lack of was added media attention, virtually none, and aggressive moves against the tea party. the media loves to talk

united states and we've had investors, bill gross and paul kruger, two very prominent individuals, paul krugman is not convinced. why would you want to raise rates when the rest of the world is going into a spiral, possibly? >> and krugman said he's trying to bully into not -- >> he used that word himself. >> his term. exactly. michael and then james quickly and then we have to go. talk financials. what do you do with the sector of exposures to the -- i don't know what you call it. flight to safety. michael, you first. >> well, when i look at it, high volatility, low gdp growth, a low interest rate outlook, go for energy limited master partnerships, timber, agriculture. anything that's yield. but sustainable dividend yields. pay yacht in terms of financials for a bipolar trade. >> james? >> i don't agree that rates stay this low. janet yellen hasn't flinched all year, weather, ukraine or recent volatility. >> rates haven't flinched either. sorry to interrupt. >> i think they take out considerable time in the msz and and start to raise rates next year it's moderate and steady. >> all right. than

i get a lot of flak from the paul krugmans.ed the definition of inflation or i have my own definition. it's them that changed the meaning of the word. inflation is expansion of the money supply. think about the word inflate. when you inflate something, when you inflate a balloon, it expands. price don't expand. they rise and fall. inflation is referring to the n expansion of the money supply. if it was about rising prices, they would call it increasing. the result of inflation is prices can rise. sometimes it's a set prices that rise and sometimes when you have inflation, you prevent prices from falling. but falling prices would be a healthy development and help the economy heal. so when the fed creates all this inflation, it distorts the economy in so many ways and ultimately the consumer is going to pay. prices are going to rise dramatically in the future. >> we're out of time, peter. thank you. i always like hearing your opinions. i'll leave you with one thing when you're thinking about higher prices. the dow jones industria

there will be a second keynote from paul krugman. and the second panel will examine the financial regulatory tools available and consider how into what extent they can be used to control financial risks. now for senator warren. we are fortunate to have her with us today and to have her in the senate every day and enjoy her leadership standing up to the excepted economic power and political influence of wall street. spelling out the harm that does to families and communities. insisting that things can and need to be different. we have been lucky enough to work with the senator on the creation of a new consumer financial protection bureau, a remarkable example of the difference that approach can make. senator warren. we are glad to be able to continue the conversation to advance these important principles. [applause] >> thank you, thank you all. thank you for the kind introduction. thank you for this chance to join you all today. today's event focuses on how the federal reserve can use its monetary tools to promote economic growth and

. >> why does paul krugman say they're not going to raise rates next year? doesn't think recovery is strong enough yet. i think he's wrong about this. they're seeing signings now. the problem is once it starts to rise, it tends to accelerate quickly if the flood gates are still wide open which they are. i think just to make a gesture to start pushing things back towards nu central as the unemployment rate and rates get going. >> is the market ready to hear that? >> i think so. what the markets want to see are householdings to believe there's enough inflation to make long-term changes. i think expectations would be positive for markets. >> you think it would create that flurry of consumer spending like i better buy this car before rate gos up? >> that's right. cars, houses are essentially an inflation bet. that you don't want to believe in deflation, you want to the believe in inflation. >> tom, you have been unshaken by any of the things thrown our way. you still think that next year is going to be a productive year for the markets. >> that's right. you know

to your point about articles answering this question, paul krugman has an article in "rolling stone"ks about some of the gains that americans do not even appreciate have occurred. how the stimulus package did actually revive the economy and the good things that happened. i think that from a pr standpoint the democrats lost. now the policies are going to change under a new administration and congress. the the american voter is the ultimate loser. aboutpaul kane is writing , beginning bybill saying "this omnibus bill cobbles together a lot of last and negotiations from barbara mikulski in a single bill and in a single week, congress attempting to fund the entire federal government, rewrite wall street regulations, expand political contributions, and among other things override the district new marijuana law -- newspaper hill" stating that four senators decided not to show up for the vote on saturday. may all missed the saturday vote. the session took most senators by surprise late on friday evening, most believed that the deal have been worked out to move the votes to monday evening ,

derivatives section, the $1.1 trillion spending bill, if you want to read more on that provision, paul krugmanrites about it in today's "new york times" in his column. the headline, "wall street's revenge." we are talking about the economic situation right now. should the president take credit for the improving economy/ one of the naked as was the jobs numbers that came out, 321,000 .obs added in november that kickedl" story off this section, republican national committee chairman rice riebus said reince p should0 21,000 jobs gain be routine, not because of obama's policies." betty is waiting in gaithersburg, maryland, on our line for democrats. caller: thank you for taking my call. of course you should take credit. i don't even know why you are asking question because presidents take credit for the economy or blamed for the economy. has listened to very good advisers, both republicans and democrats, but he listens to his advisers and he follow the policies necessary and many, many statistics right now on the economy are heading upward, good shape, so -- host: you think a president should take

about a week ago paul krugman nobel laureate, member of this faculty, wrote a "new york times" op-ediece accusing the conservative wing of the court of being corrupt because of its willingness to take cases attacking the affordable care act. i don't want to ask you about the cases obviously. i do want to ask whether you have a reaction or are willing to share one about how americans should respond to that kind of accusation? it's very strong language. is there any reason to worry about corruption at the supreme court? >> i mean, no. i mean, i -- there is not a day in my job that i have ever thought that anybody was not doing everything that they do in utter, complete good faith. you know? and you can disagree with people. you will disagree with people. but everybody is trying to get it right. and everybody is in complete good faith and that's just ridiculous language honestly. you know, it's actually -- when i was solicitor general, i of course, would argue with the court every sitting, but i would also just go and watch the court when any of the people in my office argued. it meant

so here's the last one, a week ago, paul krug map wrote a "new -- paul krugman wrote a "new york times" piece accusing the court of being corrupt because of its willingness to take cases that attack affordable care act. hygiene not want to ask you but the cases, obviously but i do want to ask you about how americans should respond to that accusation. any reason to worry about corruption at the supreme court? >> no. [laughter] >> there is not a day in my job that i have ever thought that anybody was not doing everything that they do in utter, complete good faith. and you can disagree with people and you will disagree with people. but everybody is trying to get it right. and everybody is incomplete good -- and everybody is in complete good faith and that is ridiculous language, honestly. when i was solicitor general, i would argue with the court every sit-in, but i would go and watch the court whenever the people in my office argued. i just sort of watched about 70% of the cases. and i used to think, man, this is how an institution of government should operate. and people saw it. day in